The European Union took the first step on Wednesday toward fining Italy after ruling that the country's spending drive violates the bloc's fiscal rules. Brussels has rejected Rome's budget plan for 2019.
“The Commission confirms the existence of a particularly serious case of non-compliance,” the EU said in its annual review of euro-area nations spending plans referring to Italys 2019 budget. “With what the Italian government has put on the table, we see a risk of the country sleepwalking into instability.”
Brussels has repeatedly voiced concerns over Rome's borrow-and-spend plans, warning the Italian government that it could trigger another debt crisis that would hurt them all.
According to EU regulations, a member countrys public debt cannot be higher than 60 percent of its gross domestic product, or – if it is – has to be falling towards 60 percent at a satisfactory pace.
Italys populist the Five Star Movement (M5S) party did not heed the Commissions call to make significant changes to the budget, saying the deficit was needed to finance key pledges and boost sluggish growth.
Rome has also argued that boosting growth is the best way to bring down Italys debt-to-GDP ratio of over 130 percent.
Italys Deputy Prime Minister Matteo Salvini said that he wont compromise on the budget plans core items like pension reform, citizens income, and lower taxes. He told reporters in Rome that he is, however, willing to make tweaks on issues like investments and on that topic is “open to dialogue with everyone.”